In addition, the National Rating has been upgraded to 'AAA(bra)' from
'AA+(bra)'. The Rating Outlook is Stable. A full list of BRF's ratings
follows at the end of this release.

The upgrades reflect the significant progress the company has made in
cutting cost and increasing the strength of its brands, which has
enhanced its free cash flow generation and strengthened credit metrics.

KEY RATING DRIVERS

Strong Business Profile

BRF S.A. (BRF) is one of Brazil's largest food companies and one of the
largest poultry exporter worldwide. The company's cash flow benefits
from strong domestic brands that have given the company market shares
that range between 50% and 60% in many market segments. While entry
barriers to the processed food segment are relatively low, BRF benefits
from its extensive product offering, strong brand recognition, recurring
innovation and extensive distribution capacity for refrigerated products
in Brazil. The company's business profile benefits from its geographical
diversification with approximately 50% of its sales occurring outside of
Brazil.

Strong Cash Generation

Fitch expects BRF's free cash flow (FCF) to remain strong during 2015 at
approximately BRL2 billion. This will result in a continuation of a
trend that accelerated in 2014 as the company's FCF grew to BRL2.5
billion from about BRL0.9 billion the prior year. Key drivers of the
company's strong FCF were the strong performance in international
markets, better average prices in all regions - most notably the Middle
East and Asia, lower grain input costs and good working capital
management.

Improving Profitability

BRF's margins are projected to continue to improve in 2015 due to its
strong performance in exports markets thanks to the weak Real against
U.S. dollar and improvements in distribution in those markets.
Challenges will continue to be faced in Brazil due to higher interest
rates, inflation and unemployment. Domestically, BRF is implementing
many streamlining initiatives to confront its anaemic market. These
measures include decentralizing management decisions by splitting Brazil
into five regional administrative areas, developing new pricing models,
expanding the number of points of sale, launching marketing campaigns
and products (including Perdigao's new categories) to increase brand
awareness, and accelerating the automation processes of its plant.
During 2014, BRF's EBITDA margins expanded to 16% from 10% during the
prior year.

Event Risks Remain

While Fitch expects BRF to focus on improving efficiency and securing
its market share in Brazil, more acquisitions might occur outside Brazil
to fuel revenues growth. Over the last two years, BRF has made several
bolt-on acquisitions and established joint ventures to reinforce its
distribution capacity and improve its pricing power in its exports
markets. Fitch expects BRF to continue pursuing bolt-on acquisitions to
expand its businesses internationally.

Strong Credit Metrics and Liquidity

BRF had BRL4.6 billion of cash and cash equivalents and BRL2.1bn of
short-term debt as of June 30, 2015. This does not include proceeds from
the divestment of its dairy product division to Lactalis for a total
amount of BRL2.1 billion during July 2015. Due to strong FCF generation,
Fitch expects BRF's net leverage to be below 1x in 2015. The expectation
does not include any transformational acquisitions but does include
additional cash returns to shareholders. BRF rating headroom remains
strong but Fitch believes that the company will leverage up through
acquisitions or additional cash disbursements to shareholders. As of
June 2015, the company repurchased BRL1.3 billion of its owned shares.

KEY ASSUMPTIONS

Fitch's key assumptions within the rating case for BRF S.A.

--High single-digit revenue growth due to the subdued economic
environment in Brazil, but a positive impact from export market and weak
Real;

A rating downgrade could be triggered by a substantial deterioration in
BRF's operating margins and FCF generation. This, coupled with market
share erosion beyond anticipated levels from competitive pressures
and/or a net leverage increase of above 2.75x from a large debt-financed
acquisition, could result in negative rating actions.

An upgrade could occur if BRF continues to maintain strong profitability
and market share in Brazil. A more conservative stated financial policy
established by management regarding cash return to shareholders and
credit metrics or continued leverage in the range 1.5x on a net basis on
a sustainable basis would be viewed positively.

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